Clarification and Guidance on Tax-Free Exchanges of Properties Under the CREATE Act

he Bureau of Internal Revenue issued Revenue Memorandum Circular No. 19-2022 on February 4, 2022, providing clarification and guidance on Section 8 of Revenue Regulations No. 5-2021 on the tax-free exchanges of properties under Section 40(C)(2) of the National Internal Revenue Code of 1997, as amended by Republic Act No. 11534 (CREATE).

Under said Section 40(C)(2), reorganization and transfer of property to a controlled corporation are covered by the tax-free exchanges of properties. The determination of the substituted basis of the properties transferred is provided under Section 40(C)(5).

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RMC No. 19-2022:

RR No. 5-2021:

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